Azerbaijan extends subsidies to flour producers and wheat VAT exemption


On 16 September 2021, the Cabinet of Ministers of the Republic of Azerbaijan adopted Resolution 268 which provides for the extension of Resolution 37 of 16 February 2021. According to the amendment, for each tonne of flour sold by producers, the government will allocate a subsidy calculated as the difference between the average monthly import cost of milling wheat and the upper limit of the wholesale price of flour, which has been set at AZN 520 (about USD 306) per tonne.

The average monthly import cost of milling wheat is defined as the sum of the import price and any duty imposed by the exporting country. The flour producer's margin, including domestic costs, is set at a maximum of 25 percent of the wholesale price. If the wholesale price of flour exceeds AZN 520/tonne, the size of the subsidy is reduced by the same amount.

This mechanism came into force on 1 September 2021 and will remain in effect until further notice.

In addition, the Government amended the Tax Code, with effect 1January 2021, providing for the extension of the Value Added Tax (VAT) exemption on the production and sale of wheat, wheat flour and bread until 1 January 2024.

Country: Azerbaijan